Drillsearch Sweetens Acer Energy Offer

By Ross Kelly and Gillian Tan

Australia’s Drillsearch Energy has sweetened its takeover bid for Acer Energy, after the target announced it had received a rival approach from an unnamed party.

In what appeared to be a pre-emptive strike, Drillsearch is now offering 28.5 Australian cents cash per Acer share, up from its previous 25.5 cents a share offer, valuing the oil and gas explorer at 132.3 million Australian dollars (US$137.1 million).

Drillsearch, which already owns 20% of Acer, said late Thursday that shareholders including Republic Investment Management and Wecker Family Super Fund have accepted the higher offer.

Upon completion of the acceptances, Drillsearch will own more than 40% of Acer. “We believe the prospect of an alternative offer emerging is now unlikely given these developments,” Drillsearch chairman Jim McKerlie said in a statement.

Acer shares have consistently traded above the value of Drillsearch’s initial offer since it was made public Oct.4. Expectations of a bidding war intensified when Senex Energy subsequently took a 6.4% stake in Acer and wouldn’t rule out making a rival bid, saying it’s keeping its options open. Senex last week bumped its holding to 7.6%. Calls to Senex weren’t returned.

Acer shares were in a trading halt Thursday, having closed Wednesday at 28.5 cents a share.

“The trading halt is required as Acer Energy expects to make an announcement in relation to a potential alternative proposal to the Drillsearch offer,” Acer said in a statement.

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Deal Journal Australia is an up-to-the-minute take on the deals and deal makers that shape the Australian landscape, including mergers and acquisitions, capital raisings, private equity and debt markets. In short, wherever money changes hands. Deal Journal Australia is updated throughout each trading day with exclusive commentary, analysis, data, news flashes and profiles. The Wall Street Journal’s Gillian Tan is the lead writer, with contributions from other Journal and Dow Jones reporters and editors. Send news items, comments and questions to gillian.tan@wsj.com.

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